California: The Ninth Circle of Business Hell

One of the reasons why Bill Whittle’s new video on California going out of business hits home is that it’s a reminder that, to borrow from the title of Fred Siegel’s book on America’s cities (including Los Angeles), the future once happened here.

In the 1960s and ‘70s, NASA and the Air Force were testing the most advanced aircraft ever built – the X-15, the XB-70, the wingless lifting body series, and ultimately, the Space Shuttle, the first spacecraft that would land on a runway and be (sorta-kinda) reusable at Edwards Air Force Base. Hollywood in the 1960s was showing us the wonders of the far-future with Star Trek. In the 1970s, some scruffy-looking guys in plaid shirts and blue jeans figured out how to mass-market the personal computer; even scruffier looking guys in plaid shirts and jeans figured out how to tie a film camera into a computer and revolutionized Hollywood’s special effects.

Even to everyday people not in Hollywood or high tech, California itself appeared clean, expansive and forward-thinking, as Jennifer Rubin noted in one of her last pieces for Commentary a few years ago on what it was like to move to California in the 1960s.

When Americans go to Europe they see everything but the taxes. The taxes are terrible. But that’s Europe’s business and they’ll have to figure it out. Yes what happens there has implications for us but still, they’re there and we’re here.

What Americans are worried about, take as a warning sign, and are heavily invested in is California—that mythic place where Sutter struck gold, where the movies were invented, where the geniuses of the Internet age planted their flag, built their campuses, changed our world.

We care about California. We read every day of the bankruptcies, the reduced city services, the businesses fleeing. California is going down. How amazing is it that this is happening in the middle of a presidential campaign and our candidates aren’t even talking about it?

Well, Romney has talked about Solyndra, even visiting their plant to illustrate the dangers of Obama’s crony venture socialism. But like Detroit, California is the logical end-point of Obama-nomics. Why would Obama complain? Besides, having blown-up the American auto industry, the energy industry, and heck even Gibson Guitars, presumably Obama thinks that Sacramento are a bunch of pikers when it comes to threatening businesses. Or as Troy Senik of Ricochet adds in a post titled “California, the Cautionary Tale:”

Every year, CEO magazine – a publication targeted at the nation’s captains of industry – ranks the 50 states based on how friendly their respective economic climates are for business. In 2012 – for the eighth straight year – California finished dead last.

As JP Donlon put it in the piece accompanying the magazine’s rankings, “Once the most attractive business environment, the Golden State appears to slip deeper into the ninth circle of business hell. The economy, which used to outperform the rest of the country, now substantially underperforms. And its status as the most ruinously contentious place to operate remains undisturbed.”

Harsh words, but hardly a new diagnosis from America’s business community. In 2010, the magazine called the Golden State “the Venezuela of North America” for its overt hostility to any commerce that doesn’t originate via legislative fiat. If this were the diagnosis of a single, industry-specific publication, perhaps CEO’s condemnations could be taken with a grain of salt. But the numbers bear out the magazine’s claim at every turn.

Pick a metric for public sector performance across the 50 states and it’s likely you’ll find California at or near the bottom. The Tax Foundation ranks the state 48th in the nation for its overall business tax climate, and 50th for individual income taxes. The state has the highest number of public employees (nearly 2.5 million according to a 2011 report by MarketWatch) in the country.

The future used to happen in California. Having transformed itself into Europe on the Pacific, like its Continental inspiration, the formerly Golden State appears to have no future. And having once set its sites on outer space, California is now lucky if it can simply keep the power on.

Romney’s not going to win California, but as Noonan writes, he can and should use it constantly in his speeches as an example of an increasingly leftwing and sclerotic government in total control of a state and remind voters that when they see the once-Golden State now tarnished and rusted, they’re seeing the endgame of Obama’s vision. (With Detroit representing the endzone, as an earlier video from PJTV starkly illustrated.)

5 Comments, 5 Threads

1.
stephen b

Two things required for humans to flourish: energy (in whatever form that gets work done); and clean, fresh water.
In California, we seem to be on a path to make those commodities (which really ought to be almost free by this point in human development) so expensive only the 1% will afford them.

And the moonbattery continues. Gov. Brown is proposing more taxes on the rich (of course!) and a sales tax increase which he says he’ll have rescinded once the economy gets back in shape. Since it never will as long as he continues to raise taxes, that of course is a meaningless promise. Regulation of every sort is expanding (it’s the way to grow the economy, you know) and the state is bucking the trend in pretty much all of the rest of the country, passing laws banning open carry of unloaded firearms, and proposing to ban rifles which have detachable magazines which *could* use illegal large capacity magazines (if I read the article correctly–this boggles the mind, if correct). It’s as if Brown and co. think that raising taxes and increasing regulation will somehow encourage private enterprise, which of course would be silly when said out loud, but it’s the way they’re acting.

The one interesting thing is that the movie industry hasn’t fled the state, yet. The reason they’re staying is that the infrastructure to process everything in the movie business is here in California, and moving it would be expensive. There have been several attempts to move portions of the business out of state, to Florida or elsewhere in the South, even to Canada, but each time something thwarts them and they find themselves back here. Eventually, though, I think Hollywood is going to become the place where movies *used* to be made, and much of the production will be done somewhere else. Sooner or later they’ll get tired of being the cash cow for the city of Los Angeles, the County, and the state of California.

Like too many ticks on a dog, the poli-ticks are about to kill the California host. The California host doesn’t seem to care much that it’s being bled to death by its parasites; fine, that’s their choice, but let’s make sure the ticks stay with the carcass after the death rattle. Don’t what that infestation spreading any further than it already has.

California of 2012 has the same arrogant attitude New York City of 1972 held — things may be falling apart, taxes may be high and some people may be leaving. But they’re not the important people. The key business leaders and corporations would never leave Fun City because it just has too much to offer.

New York learned by 1976 not only would they leave for New Jersey or Connecticut, they’d leave for Virginia, Texas … or even California. What followed was liberal ranting at the nearest Republican in power they could find (since there were none within the state, it turned out to be Gerald Ford), followed eventually by the acceptance of state oversight under Felix Rohatyn (brought out of mothballs to be the state’s Democratic Lt. Gov. just three years ago) and the new municipal control board. California may be even more arrogant, because the state controls 2/3rds of the Pacific Coast — some business at best can hope to flee to Portland or Seattle if they have to be in a port city to do business.

But that only means reality will take longer to set in, but the same scenario will play out. California Dems will rail at whomever the top GOP guy is — Mitt Romney if he wins in November, John Boehner if he doesn’t — and blame him for all of their problems. But it’s hard to see even a majority of Democrats from the other 49 states having to guts to go back to their voters and explain why they need to cough up the bucks to subsidize California’s public sector unions or its highest-in-the-nation social welfare benefits. If they do get federal funds, it will only be if a control board is appointed out of D.C., and with some Republican oversight, to run the state’s budget for them.